Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/118010
Authors: 
Rubio, Santiago J.
Year of Publication: 
2004
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 133.2004
Abstract: 
In this paper the scope of Bergstrom's (1982) results is studied. Moreover, his analysis is extended assuming that extraction cost is directly related to accumulated extractions. For the case of a competitive market it is found that the optimal policy is a constant tariff if extraction is costless. However, with depletion effects, the optimal tariff must ultimately be decreasing. For the case of a monopolistic market the results depend crucially on the kind of strategies the importing country governments can play and on whether the monopolist chooses the price or extraction rate. For a price-setting monopolist it is shown that the importing countries cannot use a tariff to capture monopoly rents if they are constrained to use open-loop strategies, even if the governments sign a tariff agreement. This result is drastically modified if the importing countries in the tariff agreement use Markov (feedback) strategies. For a quantity-setting monopolist the nature of the game changes and the importing country governments find it advantageous to set a tariff on resource importations. Moreover, in this case the importing countries in a tariff agreement enjoy a strategic advantage which allows them to behave as a leader.
Subjects: 
Tariffs
Tariff agreements
Non renewable resources
Depletion effects
Price-setting monopolist
Quantity-setting monopolist
Differential games
Open-loop strategies
Linear strategies
Markov-perfect Nash equilibrium
Markov-perfect Stackelberg equilibrium
JEL: 
C73
D41
D42
F02
H20
Q38
Document Type: 
Working Paper

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